Qualcomm 4Q profit rises 8 pct, beats Street
Wednesday, November 3, 2010; 6:22 PM
NEW YORK -- Qualcomm Inc., the developer of chips and technology for cell phones, on Wednesday said results for the latest quarter blew past expectations on strong sales of components for smart phones.
The San Diego-based company also forecast results well above expectations in the new quarter.
Qualcomm shares jumped $3.11, or 6.8 percent, to $48.75 in extended trading, after the release of the report. That's close to the 52-week high of $49.80, hit in January
Qualcomm said it earned $865 million, or 53 cents per share, in its fiscal fourth quarter, which ended in September. That's up 8 percent from $803 million, or 48 cents per share, in the same period last year.
Excluding some investment results, share-based compensation and some tax effects, Qualcomm earned 68 cents a share, well above the 59 cents estimated by analysts polled by Thomson Reuters.
Revenue rose 10 percent to $2.95 billion. Analysts were expecting $2.85 billion.
Qualcomm said it expects earnings of 70 cents to 74 cents in the quarter that ends in December, on revenue of $3.05 billion to $3.35 billion. Analysts had been projecting earnings of 64 cents per share on $3.0 billion in revenue.
The rosy forecast comes after news reports have indicated that Verizon Wireless would get to start selling Apple Inc.'s iPhone early next year. The reports haven't been confirmed by the companies, but analysts have started to speculate that Qualcomm would be a major supplier of chips for the new phone, which could also be used by other carriers that use the "CDMA" network technology, which Qualcomm created.
Qualcomm's shipment of cell phone chips hit a record in the quarter at 111 million, reflecting a recovery from the recession.
The company is benefiting from the spread of so-called "3G" wireless networks that give phones fast data access. Already established in developed countries, such networks are spreading across the world. The company sells chips for 3G connectivity, and phone manufacturers pay it royalties for every phone as well.
Qualcomm is also starting to become a major player in processing chips for smart phones. Its "Snapdragon" chips are used in every phone running Microsoft Corp.'s new Windows Phone 7 software, and they're used in high-end phones running Google Inc.'s Android software as well.
Apple's iPad is inspiring competitors to create tablet computers, and Qualcomm expects to play a role there as well. More than 10 companies are designing tablets with Qualcomm's next-generation processing chips, CEO Paul Jacobs told analysts on a conference call.
One segment that isn't doing well is FLO TV, which beams 10 to 15 channels of live TV to cell phones in the U.S. Only a few models are able to receive the signals, and consumers have been more interested in getting smart phones. Running FLO TV cost Qualcomm $132 million in the latest quarter.
Qualcomm said restructuring FLO TV to prepare for a sale or shutdown will reduce earnings next year by $125 million to $175 million.